Keneally was elected to the seat of Heffron in the New South Wales Legislative Assembly in 2003, It was in fact her husband Ben who was more interested in a political career, relying on his friendship with
Joe Tripodi. However, the party's
affirmative action rules required a female candidate, so Keneally ran instead. Before the election, Labor insiders were concerned that her strong
American English accent would not play well with voters. Although she reportedly took
elocution lessons to sound more Australian, to this day she speaks with a marked American accent. As NSW Minister for Disability Services, Keneally undertook measures to rebuild outdated institutional residential facilities for people with disability, going back on promises made by her (non-immediate) predecessor
Faye Lo Po'. As NSW Planning Minister from August 2008, Keneally's department oversaw the local traffic diversions, and strict environmental management during construction, around the desalination pipeline works between Erskineville and Kurnell, approved by the department under the desalination pipeline project approval, granted by
Frank Sartor, in November 2007. On 17 November 2009, Keneally was appointed
Minister for Infrastructure.
Premier Challenges for leadership On 3 December, Keneally narrowly defeated Sartor by two votes to become the Right's candidate in a
leadership spill against Rees. After famously denying suggestions of a leadership spill against Rees, a spill was called and she defeated Rees in a party room ballot with a majority of 45–21. On 4 December 2009 Keneally was sworn in as the 42nd premier (and first female Premier) of New South Wales, by the
State Governor,
Marie Bashir, famously declaring "I'm nobody's puppet, nobody's girl" addressing allegations by Rees that she was chosen to act in the interest of disgraced fellow Terrigal faction members including
Eddie Obeid. For the first time in Australian history, both the Premier and Deputy Premier (
Carmel Tebbutt) of a state were women. During her time as Premier Keneally was a supporter of the development of the headlands. To ensure the project was completed without delay, Keneally transferred various local government planning powers to the state government, created a new portfolio relating to the major development Barangaroo for which she took responsibility, and additionally for giving exemption to Barangaroo from environmental planning laws.
Party renewal Keneally pushed to renew the Labor Party, with 23 members of the 50 caucus members retiring. Her push also included the resignation of the NSW Labor President, Bernie Riordan and retirements of Labor powerbrokers, Joe Tripodi and Eddie Obeid.
Electricity privatisation On 14 December 2010 her government sold the first tranche of the partial privatisation of the state's electricity assets for $5.3 billion. Eight of the directors quit in protest over the sale of trading rights to the output of generators. After criticism of the privatisation, her Government abandoned the second stage of its electricity privatisation plan, as no companies bid. On 22 December 2010 NSW Governor Marie Bashir
prorogued Parliament on Keneally's request. This act normally takes place later than December prior to elections. There were accusations that Keneally tried to halt the electricity inquiry, which later proceeded. In October 2011 the inquiry which the O'Farrell government set up reported to the NSW Liberal/National Government that the partial sale was "reasonable and appropriate".
Election defeat Keneally led Labor into the
2011 state election. She was seeking to lead Labor to a fifth consecutive term in government, and also to become the second woman elected as a state premier in her own right, after
Anna Bligh in Queensland. But Keneally was a heavy underdog for most of the campaign. At one point polls showed Labor trailed the
Barry O'Farrell-led Coalition by 26 points on the two-party vote and Keneally trailed O'Farrell by 16 points as preferred premier. Despite Keneally's efforts to rehabilitate Labor's image, opinion polls and commentators had almost universally written Labor off by the time the writs were dropped. An election-eve poll showed Labor's support at a record low of 23 percent primary vote. The ABC's
Antony Green estimated that Labor faced being cut down to as few as 13 seats. In the 26 March election the Labor government was heavily defeated, suffering a swing of over 16 points on a two-party basis —the largest in a general election at any level in Australia since
World War II. In the process, Labor lost many seats in its former western Sydney heartland. Ultimately, Labor was reduced to 20 seats (down from 48 at dissolution), its worst showing in over a century. Keneally resigned as Premier and state Labor leader on election night and announced she would return to the backbench. On 11 June 2011, Keneally was granted by the Governor retention of the title "
The Honourable". On 23 June 2012, Keneally announced her resignation from the
New South Wales Parliament.
Labor government and ICAC After the defeat of the Labor government, a series of investigations at the Independent Commission Against Corruption, found that Keneally ministers Obeid, Tripodi, and McDonald had acted in a corrupt manner. Counsel assisting the inquiry, Geoffrey Watson , said in 2012 of investigations into the actions taken by the men in 2010 that these inquiries were
the most important investigation ever undertaken by the ICAC and that there was
corruption on a scale probably unexceeded since the days of the Rum Corps. Keneally appeared as a witness at the ICAC in March 2014 concerning investigations of her former colleagues. She said that she had had concerns about Obeid, Tripodi and Tony Kelly's lobbying and that their efforts had not influenced her. Asked if Obeid had "put her in her job" as premier, Keneally replied: "No, caucus did". ==Federal politics==